Doing Business in Finland

Finland, a Nordic country known for its high quality of life, robust education system, and technological innovation, offers a stable and transparent business environment. With a reliable legal system and low corruption levels, Finland is an attractive destination for entrepreneurs and established businesses alike. This blog post will delve into the intricacies of setting up a business in Finland, referencing essential government websites, discussing common business practices, sales contracting processes, and crucial information that business owners should know before getting started.

Setting Up a Business in Finland

Legal Framework and Business Environment

Finland ranks 20th among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The country offers a transparent and efficient regulatory environment, making it relatively straightforward to establish and operate a business.

Steps to Establish a Business

1. Choose a Business Structure: The most common types of business entities in Finland are:
   • Private Limited Company (Osakeyhtiö or Oy): Suitable for small to medium-sized businesses.
   • Public Limited Company (Julkinen osakeyhtiö or Oyj): Ideal for larger enterprises.
   • Partnerships (Avoin yhtiö or Ay and Kommandiittiyhtiö or Ky): For businesses with multiple owners.
   • Sole Proprietorship (Toiminimi): For individual entrepreneurs.

2. Register the Business: The Finnish Patent and Registration Office (PRH) is the primary authority for business registration. You can register your business online through the PRH website. The process involves:
   • Submitting the necessary documents.
   • Paying the registration fee.
   • Receiving a Business ID (Y-tunnus).

3. Tax Registration: Register for taxes with the Finnish Tax Administration (Verohallinto). This includes Value Added Tax (VAT), employer contributions, and other relevant taxes.

4. Obtain Necessary Permits and Licenses: Depending on your business type, you may need specific permits or licenses. The PRH and local municipalities can provide guidance on the required permits.

5. Open a Bank Account: Open a corporate bank account in a Finnish bank to manage your business finances.

Government Resources

• Finnish Patent and Registration Office (PRH): PRH Website
• Finnish Tax Administration (Verohallinto): Verohallinto Website

Common Business Practices

Business Etiquette

Finnish business culture is characterized by formality, punctuality, and direct communication. Here are some key aspects to keep in mind:

• Punctuality: Being on time is crucial in Finnish business culture. Arriving late for meetings is considered disrespectful.
• Direct Communication: Finns value honesty and straightforwardness. They appreciate clear and concise communication.
• Formal Attire: Business attire is typically formal, especially in corporate settings.
• Decision-Making: Decisions are often made collectively, and consensus is valued.

Networking and Relationships

Building strong business relationships is essential in Finland. While Finns may seem reserved initially, they value long-term relationships and trust. Networking events, industry conferences, and trade fairs are excellent opportunities to connect with potential partners and clients.

Sales Contracting Processes

Contract Law

Finnish contract law is based on the principle of freedom of contract, meaning parties can freely negotiate the terms of their agreements. However, certain mandatory provisions must be adhered to, especially in consumer contracts.

Key Elements of a Sales Contract

1. Offer and Acceptance: A contract is formed when one party makes an offer, and the other party accepts it.
2. Consideration: There must be something of value exchanged between the parties.
3. Intention to Create Legal Relations: Both parties must intend to enter into a legally binding agreement.
4. Capacity: Parties must have the legal capacity to enter into a contract.
5. Legality: The contract’s purpose must be legal.

Drafting and Negotiation

When drafting a sales contract, it is essential to include clear terms and conditions, such as:

• Product/Service Description: Detailed description of the goods or services being sold.
• Price and Payment Terms: The agreed price and payment schedule.
• Delivery Terms: Delivery dates, methods, and responsibilities.
• Warranties and Guarantees: Any warranties or guarantees provided by the seller.
• Liability and Indemnity: Clauses outlining each party’s liability and indemnity obligations.
• Dispute Resolution: Methods for resolving disputes, such as mediation or arbitration.

Government Resources

• Ministry of Economic Affairs and Employment: Ministry Website
• Finnish Competition and Consumer Authority (FCCA): FCCA Website

Things Business Owners Should Know

Economic Climate

Finland’s economy is diverse, with key sectors including technology, manufacturing, and services. Despite global economic challenges, Finland remains a resilient and innovative economy. According to the 2023 Investment Climate Statements, Finland’s GDP is expected to contract by 0.2 percent, but the economy is projected to return to growth by the end of 2023.

Labor Market

Finland has a highly skilled and educated workforce. The labor market is regulated by collective agreements, which set minimum standards for wages, working hours, and other employment conditions. It is essential to familiarize yourself with these agreements and comply with labor laws.

Intellectual Property

Protecting your intellectual property (IP) is crucial when doing business in Finland. The PRH is responsible for IP registration, including patents, trademarks, and designs. Ensure that you register your IP to safeguard your business interests.

Sustainability and Corporate Responsibility

Sustainability and corporate social responsibility (CSR) are integral to Finnish business culture. Companies are expected to operate ethically and contribute to environmental and social well-being. Embracing sustainable practices can enhance your business reputation and attract environmentally conscious consumers.

Digitalization and Innovation

Finland is a global leader in digitalization and innovation. Leveraging advanced technologies and embracing digital transformation can provide a competitive edge. The Finnish government supports innovation through various grants and funding programs, which can be explored on the Business Finland website.

Government Resources

• Business Finland: Business Finland Website
• Invest in Finland: Invest in Finland Website